Managerial accounting involves collecting, analyzing, and reporting information about the operations and finances of a business. These reports are generally directed to the managers of a business, rather than to any external entities, such as shareholders or lenders. The functions of managerial accounting include:

Margin analysis. Determining the amount of profit or cash flow that a business generates from a specific product, product line, customer, store, or region.

Trend analysis. Reviewing the trend line of various costs incurred to see if there are any unusual variances from the long-term pattern, and reporting the reasons for these changes to management.

Transaction analysis. After spotting a variance through trend analysis, a person engaged in managerial accounting might dive deeper into the underlying information and examine individual transactions, in order to understand exactly what caused the variance. This information is then aggregated into a report to management.

Capital budgeting analysis. Examining proposals to acquire fixed assets, both to determine if they are needed, and what the appropriate form of financing may be with which to acquire them.

Given the broad range of investigative and analysis activities noted above, we could state that managerial accountants acts in an advisory role, to warn managers of impending issues and to direct their attention toward possibly profitable opportunities.